(Reuters) – Porsche AG cut its sales and profit outlook on Tuesday due to an unexpected aluminium alloy supply shortage, sending the German company’s shares down 4% to the bottom of Frankfurt’s blue-chip index.
Flooding at an unspecified European contractor has hurt supply of aluminium alloy, the luxury sports car maker said, affecting production of all its models and possibly leading to shutdowns for one or more vehicle series.
The alloy shortage also impacted the supply chains of German premium carmaker BMW and Mercedes-Benz, but both were able to find alternative suppliers. Spokespeople for BMW and Mercedes-Benz declined to give further details.
Porsche said the alloy supplier, which it did not name, had declared force majeure in writing, meaning it was unable to meet its contractual obligations due to events outside its control.
Body components made of aluminium are used in all vehicle series manufactured by Porsche, and reliance on the supplier has exposed the company to particular risk.
The aluminium alloy shortage adds to other challenges for Porsche in recent months, including software issues, product delays, supply chain problems and a sales slump in China.
‘BIBLICAL FLOOD’
“It’s been a biblical flood that’s wiped away the gains from the IPO,” said Stephen Reitman of Bernstein Research.
He was referring to Porsche’s initial public offering in September 2022, when shares closed at 82.50 euros in Germany’s second-biggest market debut. Shares were down 4.1% at 69.66 euros on Tuesday.
Bernstein analysts said the flooding occurred at a Swiss supplier, and would lead to the production loss of at least 10,000-17,400 vehicles in the second half of 2024.
At the high end, that figure is equivalent to over 11% of Porsche’s first-half deliveries.
Porsche SE (PSHG_p.DE), opens new tab, the holding firm of the Porsche and Piech families that control Volkswagen (VOWG_p.DE), opens new tab and holds a blocking minority in Porsche AG, confirmed its 2024 earnings forecast despite the alloy supplier’s warning.
U.S.-based Novelis, which delivers to a joint venture producing body parts for cars and co-owned by Porsche, was reported to have shut down a Swiss site due to floods. Novelis did not immediately respond to a request for comment.
Aluminium maker Constellium , which is U.S.-listed but headquartered in France, earlier this month warned that its Swiss facilities had been impacted by flooding but said it did not supply Porsche from Switzerland.
Both companies name Porsche or firms affiliated to the automaker among their customers.
RESULTS DUE WEDNESDAY
Porsche AG now expects sales between 39 billion and 40 billion euros ($44 billion) as a result of the flooding in the aluminium supplier’s production facility. It previously expected revenue between 40 billion and 42 billion euros.
The company said it was to be expected that the delays in the production and delivery of vehicles would not be fully compensated for in the rest of the year.
Porsche now sees a return on sales between 14% and 15% for the year, down from its previous expectation of 15% to 17%.
The company reports first-half results on Wednesday.
It faces muted demand in China, driving global deliveries down 7% in the first half of the year.
Porsche is also struggling with low electric vehicle sales this year. It watered down its EV ambitions on Monday, citing customer demand and developments in the sector.
($1 = 0.9183 euros)
Reporting by Utkarsh Shetti, Kanjyik Ghosh, Andrey Sychev, Christoph Steitz, Nick Carey and Alexander Huebner; Editing by Christopher Cushing, Alexander Smith and Bernadette Baum
